The 1980s brought major changes to the Swedish credit market. The regulations previously governing the credit market were gradually abolished, the boundaries between credit institutions faded, structural changes were prepared or implemented, competition became tougher, etc. The pace of change continued and escalated at the end of the 1980s and into the 1990s to include an even more rapid internationalisation process.
In the light of this scenario, an initiative was taken in the savings bank sector in 1989 to implement a structural change within the organisation of the savings banks with a view to creating better conditions for coping with the rapidly changing competitive situation. A proposal for a new structure was drawn up, for which support was gained throughout the sector. The proposal required legislation amendments, primarily in the field of association legislation. The proposal involved allowing the conversion of savings banks into limited banking companies. The government participated actively in the process of implementing this legislative change. A bill from the Ministry of Finance was circulated for comment in a comprehensive process, and by and large, it won the approval of all bodies from which comments were requested. The bill, which was essentially the same as the original proposal, was adopted by the Swedish Parliament in the spring of 1991. In practice, it was possible to implement the new savings bank structure at the end of 1991.
A necessary legal aspect of this restructuring process was the creation of savings bank foundations designed to become the shareholders of the limited savings bank companies.
2. The first eleven foundations
The eleven major regional savings banks were converted in 1991 into limited banking companies and an equal number of savings bank foundations were established, each with 100% ownership of a limited savings bank company. In conjunction with the financial crisis and the formation of Sparbanken Sverige AB (SwedBank), the foundations became co-owners of this bank instead. Due to new capital requirements, the IPO and the subsequent acquisition of Föreningsbanken, the share capital of the eleven original foundations has been diluted and is now just under 20%.
3. Additional savings bank foundations
A number of additional foundations were subsequently formed, primarily due to new capital requirements in conjunction with the purchase of former Föreningsbanken branches. In these cases, FöreningsSparbanken (SwedBank) has become a co-owner, with varying percentages of ownership, of the six newly formed limited savings bank companies, together with a foundation for each of the converted banks (Färs & Frosta, Rekarne, Söderhamn, Öland, Bergslagen, Vimmerby and Sjuhärad).
Besides the above-mentioned co-owned banks, conversion has been done in Varberg, Skara, Lidköping, Västervik and Ängelholm but in these cases the foundations own the entire share capital. More conversions will probably occur.
4. The role and mission of the foundations
The foundations have two tasks. On the one hand, they must of course act as owners, and on the other, they must be active within their operating area in promoting trade and industry, research, education, sports or culture.
The foundation shall meet the goal of promoting savings activities in Sweden by acting in its capacity of shareholder of a bank and/or savings bank company to safeguard and develop the fundamental ideas and values of savings bank operations. It shall also endeavour to make banking operations within the savings bank sector into an effective competitive factor in the credit market.
Besides the goal of promoting savings activities in Sweden, the foundation may also promote trade and industry, research, education, sports or culture within (Savings Bank X)’s previous operating area. This goal shall be met through the distribution of cash contributions to physical or legal entities from the return on the foundation’s assets.”
5. The savings bank foundations as instruments of society
The savings bank movement has a longstanding, deep-rooted tradition in terms of the widespread promotion of savings activities and the dissemination of knowledge about saving and capital accumulation in the broadest sense. The goal of promoting savings activities is not self-assumed, but is stated in the Swedish Savings Bank Act. The advent of the savings banks was actually based on the desire of the founders to contribute actively to the creation of welfare and security for large numbers of people by means of financial planning. Over recent decades, the savings banks have demonstrated that they are both willing and able to adapt to changing times and develop their operations in line with modern requirements. In many cases, the savings banks have been forerunners in the field of capital accumulation.
The task of the savings bank foundations includes keeping up savings bank operations as regards the promotion of savings activities in Sweden. This may be accomplished by means of the foundations organising activities under their own auspices or providing financial contributions to physical or legal entities active within areas that the foundations wish to support.
The foundations are responsible for initiatives in several different areas within the framework of the foundations’ regulations, e.g. the development of trade and industry, research and the dissemination of knowledge. The goal of their operations in this respect can be described as follows: to conduct activities and implement measures that help create welfare for a broad group of people.
The activities of the foundations are part of spreading the fundamental ideas and values of the savings banks. The activities conducted by the foundations should not, however, be designed in a way that might lead to confusion with FöreningsSparbanken/Sparbanken’s general marketing of products and services.
In the foundations’ role as instruments of society, the trustees have an important role to play, which involves using their contacts within society to snap up the ideas and needs that the foundation can develop and meet by using its resources.